In spring 2014, Eva Engineering Company signed a contract with the city of Springfield, to construct a new city hall. Eva expects to construct the building within two years and incur expenses of $120 million, which means the company earns a $40 million profit on the contract. The city of Springfield paid $40 million when the contract was signed, $80 million within the next six months, and the final $40 million exactly one year from the signing of the contract. Eva incurred $48 million in costs during 2014 and rest in 2015 to complete the contract on time.
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Using the percentage-of-completion method, prepare the related FSET entries and the Income Statement to the Gross Profit line for 2014 and in 2015.
Using the completed contract method, prepare the related Balance Sheet account numbers and the Income Statement to the Gross Profit line for 2014 and in 2015.